Betting the house on solar

By: CHRIS BAGLEY - Staff Writer
Company says panels built into roof tiles win on price and appearance | Saturday, February 23, 2008 7:38 PM PST ∞

SOLANA BEACH ---- Who says the sun sets in the west? Not David Saltman.

Saltman is the chairman and chief executive of Open Energy Corp., which designs solar panels for roofs covered in flat cement tiles, or the interlocking "S"-shaped tiles that are common from San Antonio to Santa Ynez. As energy prices rise and more government agencies act to limit fossil fuels' impact on global temperatures, Saltman and 9,000 shareholders are betting on a bright future for solar technology.

In Saltman's view, most homeowners will eventually come around to the idea of solar panels, but have balked so far at the five-figure price tags and at the metal scaffolding jutting off the roof.

Open Energy's innovation is to embed its "SolarSave" panels into 4-foot-long plates that roofers can attach directly to the wood, without relying on an electrician to come along later. Cutting the extra step saves labor costs and minimizes the problems that can arise later, according to the company.

Like other "integrated" solar-panel systems available to roofers, SolarSave is designed to be less obvious than traditional solar panels mounted atop metal racks. Moreover, Saltman said, it's as durable as standard roofing materials and the cells inside are colored to blend in with a wider variety of roof tiles.

"The objections to solar are 'expensive,' 'tough to install' and 'ugly,'" Saltman said. "We get around all three of these."

Learning curve
Like most other solar panels, Open Energy's panels can shave hundreds of dollars a year off electricity bills. In urban and suburban areas, the vast majority of solar panels feed electricity into the grid during the daytime, providing credits that the household uses at night. A house with enough solar panels on its roof can end up ---- at least theoretically ---- with a "zero" bill at the end of the month.

Those long-term savings and growing awareness of greenhouse gases have convinced a growing number of public agencies and nonprofit groups to install solar panels on their buildings. The largest project to use Open Energy's panels, a 675-kilowatt system for the new California Academy of Sciences building in San Francisco was completed earlier this month.

In contrast, Open Energy's key customers, homebuilders, are more sensitive both to costs and to the whims of consumers. That means Open Energy has had to push potential customers up a learning curve, but the company also enjoys a relatively untapped market once it gets them there.

In an interview last week, President Paul Barnes of Shea Homes' San Diego division said new-home buyers with $10,000 or $12,000 to spend on upgrades typically choose granite countertops or higher-grade cabinets, which provide immediate satisfaction, over solar roofs, whose benefits stretch over several years.

When Shea offered solar roofs on about 100 new homes just south of Scripps-Poway Parkway in 2001 and 2002, only five buyers chose the option, Barnes said.

Another 100 houses in the development came standard with solar roofs, and while many of the buyers ended up appreciating the energy savings, few of those who later put their houses on the market were able to make the solar roofs a selling point, he said.

"I guarantee you 20 years from now, houses will have solar," Barnes said, "but it's not going to be overnight."

Transitions
Open Energy got its first big break last month when they landed a $2.3 million deal from Petersen Dean Inc., one of the West Coast's largest roofers. In the two-plus years since Saltman took over as chief, the company has yet to report a quarterly profit and has funded its operations mainly through issuing new shares and selling corporate bonds, according to federal securities filings.

The company recently tapped Suntech Power, a large Shanghai-area solar company, to supply its solar cells. The outsourcing will help speed Open Energy's road to profitability, Saltman said.

Until June 2005, the company previously was Barnabus Energy Inc., a Vancouver, B.C.-based oil and gas company. Now, Open Energy has about 30 employees and is traded as OEGY.OB on the over-the-counter exchange.

Just 0.2 percent of the electricity used in California is now generated by solar power, according to the California Energy Commission. Most of that comes from sprawling solar farms in remote desert areas, though panels are installed on about 30,000 buildings, according to the agency. A spokeswoman for San Diego Gas & Electric said 4,500 homes and 300 other buildings are equipped with solar panels that feed into its grid.

The state should make greater use of solar energy in the coming decades, the commission argued in its 2007 Integrated Energy Policy Report. Solar cells, which are most efficient at midday when the sun is at its peak, will be particularly important in helping to fuel air-conditioners in houses and businesses, which are being built disproportionately in hot inland areas, according to the report.

Saltman said he recommends solar energy to meet 40 to 50 percent of a house's needs, corresponding to the hottest, sunniest part of the day.

Costs, benefits
For homeowners, who have considered installing solar panels in the last few years, the payoff has been somewhat uncertain, Temecula-area appraiser David Lynch cautioned. Amenities rarely increase a home's value by the full cost of the improvement, and solar panels' record has been notably weak, he said. To make a system cost-efficient, Lynch said, a homeowner must limit the initial cost of installation while saving a maximum of energy while occupied.

State and federal tax incentives figure into the equation, too. California provides rebates of $2.50 to $2.60 per watt of solar capacity, or $2,000 on a typical 1-kilowatt solar installation, which might cost about $9,000.

Builders and owners have applied for the credits on 1,522 new homes statewide since the incentives were introduced in January 2007, according to a Feb. 12 report by the energy commission. About 1 percent of those have been for houses in the area served by San Diego Gas & Electric.

The homeowner in the example above can also deduct $2,000 from his taxable income, saving another $500 for a taxpayer in the 25 percent bracket who itemizes deductions. With electric bills cut in half, the homeowner might recoup the remaining $6,500 in 8 or 10 years, Saltman said.

That payback period is shortening, making solar panels a more attractive option for new-home buyers, said Norm Miller, director of the Burnham-Moores Center for Real Estate at the University of San Diego. And companies like Open Energy are eating away at the space-agey stigma of unwieldy rooftop panels, Miller wrote in an e-mail last week.

"There seems to be an explosion of firms with better designs and more efficient solar cells," he said.

Contact staff writer Chris Bagley at 760-740-5444 or cbagley@nctimes.com.

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